CARE cuts Vishnu Prakash R Punglia's rating to junk after a ₹156 crore cash loss.
The rating agency moved the infra firm to 'Issuer Not cooperating' after a brutal Q4 showed a ₹130 crore operating loss and promoter pledge at 93% of holdings.
What's new
- CARE downgraded Vishnu Prakash R Punglia's long-term facilities to CARE BB-; Negative, two notches from CARE BB+; Negative.
- The short-term rating was cut to CARE A4 from CARE A4+, and both moved to the 'Issuer Not Cooperating' category.
- Q4 operating loss was ₹130 cr, with collection days at 277 and inventory days at 305.
Why this matters
The downgrade moves the company into sub-investment-grade territory, two notches deeper into junk. For a nano-cap with a ₹359 crore market cap, the ₹156 crore cash loss is existential. The company says the non-cooperation is a procedural dispute over switching agencies, but CARE's data on collections and promoter pledging tells a different story.
What we're watching
- Whether the company completes its switch to a new rating agency and what that new agency concludes.
- Bank covenant compliance, with fund-based utilisation already above 90%.
- Execution on the ₹5,000 crore order book to convert backlog into cash.
The full read
CARE Ratings has cut Vishnu Prakash R Punglia's long-term bank facilities by two notches to CARE BB-; Negative from CARE BB+; Negative. The move follows a brutal FY26: the infra company posted an operating loss of ₹130 crore in Q4 and a cash loss of approximately ₹156 crore for the full year. That cash loss is 43% of the company's ₹359 crore market capitalization. Working capital is frozen; collection days sit at 277 and inventory days at 305. Promoters have pledged 93% of their holdings. The company's explanation is that it formally notified CARE it was switching rating agencies, making the 'non-cooperation' classification a procedural artifact. CARE disagrees. Its report flags that the underlying financial health has deteriorated regardless of the dispute. With fund-based utilisation already above 90% and a ₹5,00 crore order book that is not converting to cash, the downgrade signals the company may struggle to access bank funding at any reasonable cost. That is the real risk for a firm burning through this much capital.
Questions answered
- Why did CARE Ratings downgrade the company?
- CARE cited a severe operating and cash loss for FY26 (₹156 cr total), coupled with high working capital strain (277-day collection cycle) and promoter pledge at 93% of holdings.
- What does 'Issuer Not Cooperating' mean?
- The company told CARE it would not accept the review as it was switching to a new rating agency. CARE therefore moved the ratings to a non-cooperation category, which it uses when an issuer stops providing information for an ongoing assessment.
- How big is the cash loss relative to the company?
- The ₹156 crore cash loss for FY26 is more than 43% of the company's total market capitalization of ₹359 crore, underscoring the scale of the financial deterioration.
- What is the company's order situation?
- Vishnu Prakash R Punglia reports a healthy order book of ₹5,000 crore. However, CARE notes that slow project execution and delayed certifications are preventing the backlog from converting into working capital, straining liquidity.